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Nathealth - Healthcare Federation of India has submitted a comprehensive set of recommendations to the government for the Union Budget 2023-24 to address the current barriers for the private healthcare sector.
The recommendations cover strengthening healthcare infrastructure across tier 2 and 3 geographies, investing in emergency healthcare delivery services and expanding testing infrastructure in the hinterland by accelerating capex spends.
In the short- term recommendations submitted to the government, Nathealth has highlighted the need of enhancing the role of the private sector in increasing capacities of our healthcare professionals to address the shortage of healthcare professionals.
It has recommended rationalization of GST. Unlike in other sectors, the healthcare sector has not been able to derive the benefits of the GST transition. In fact, the embedded taxes in the healthcare sector have increased in the post-GST regime compared to pre-GST scenarios. Based on the results of the study of the embedded taxes, Nathealth proposes the following two options like imposition of a 5% GST merit rate at the output healthcare services for all healthcare establishments (both private and government) with the option to claim full input tax credits, levying a 5% GST rate on output services for all private hospitals and an optional dual rate structure for government healthcare establishments.
Other recommendations include unutilized past MAT credit while transitioning to the new Income tax regime. As per the existing direct tax regime, MAT credit entitlement is available for healthcare players who had embarked on greenfield capacity expansion.
Availability of the credit has meant they are unable to transition to the reduced corporate tax regime of 25% as announced by the Union finance minister earlier, which would be available for companies which do not have un-utilized MAT credit in their books. Till such time the MAT credit is utilized, companies that have invested in hospital infrastructure would be under the existing corporate tax regime of 34.94%. This deprives the companies who paid MAT in good faith, the benefit of setting off the credit against the new tax regime.
Recommendations also point towards clearance of working capital arrears both for providers and procurement organisations and health financing. Increasing coverage of insurance particularly in tier 2 to 3 towns will drive capacity growth as high-quality providers will have confidence in the paying capacity of the patients.
Around 48% of the population travels 100 Km to access healthcare, there are opportunities to build asset-light models powered by digital technologies improving access and affordability with appropriate reimbursement and financing models.
Highlighting the need for budgetary allocation for clearing past dues under CGHS and ECHS, it is painful that reimbursements for completed treatments under these schemes are not made on time, and in most cases, remain unpaid even for 2-3 years (in some cases even up to 6 years), causing severe stress on working capital and cash flows for private healthcare providers.
It has been recommended that the government considers a one-time, accelerated budgetary allocation for clearing past dues under CGHS and ECHS (up to an ageing of 90 days) in the forthcoming budget. Private healthcare providers will extend fullest cooperation in ensuring that all claim details are made transparent and available, and a one-time resolution is seamlessly completed.
Speaking about the recommendations, Dr. Shravan Subramanyam, president, Nathealth, shared that, “It is imperative to build infrastructural capabilities so that people have greater access to quality and critical healthcare services. Viability gap funding by the government is essential to set up hospitals in tier-1 and tier-2 cities, encouraging increased investment in the healthcare infrastructure. Uniform adoption of Ayushman Bharat Digital Mission is another imperative which calls for clearly defined delivery models for innovative modules developed by private players. We are also witnessing a significant impact on the cost of running business which will affect the sustainability of MedTech organizations.”
“If all payment backlogs both for providers and suppliers under insurance and public procurement are cleared, it would significantly improve the availability of healthcare infrastructure. As we prepare for the post-pandemic era, stable policy frameworks and incentives to help the healthcare sector remain viable- investment via FDI, expanding reach, investing in technology and innovation, reinforcing patient safety and adding to the skilled professionals of India,” he further added.
Dr Ashutosh Raghuvanshi, senior vice president, Nathealth and MD & CEO, Fortis Healthcare, said, “India is amongst the most preferred destinations globally for medical tourism and therefore, increased policy support is required to encourage, facilitate medical value travel to India, develop MVT as an organized sector. Another critical area is addressing the shortage of healthcare professionals – by identifying doctors, nurses and technical staff willing to work in Tier 2/3 cities and looking at non-traditional ways to double the number of doctors. We should look at best practices adopted in universities abroad (fall/summer admission pattern) to increase seats in existing medical colleges. Further, the sector needs lower cost financing through tax incentives for both existing and new healthcare projects. For new projects, the government should provide a tax holiday period of 15 years and for existing projects, tax relief for 10 years as re-investment support. Declaring healthcare as a National Priority Sector and classifying it on the same lines as agriculture (priority-sector lending), will give banks the flexibility to lend to private healthcare institutions, on longer tenures, at lower rates.”
Nathealth further emphasizes that the budget allocation for health should be substantially increased to 2.5% of GDP in line with the government’s own stated intent to spend 2.5% of GDP on healthcare by 2025.
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